Under the Affordable Care Act (ACA), most people are now required by law to have health insurance–either through their employer, Medicare or Medicaid, or that they purchase on their own. If you don’t have any of these, you may be subject to a penalty that could cost you nearly as much as buying insurance.
You may also hear the penalty referred to as a fine, individual responsibility payment, or individual mandate.
The following information pertains to 2015 coverage:
Penalties are increasing in 2015
The penalty for not having insurance was low in 2014 and 2015, but they are going up every year. In 2015 it was the greater of:
In 2016, it will be 2.5% of income or $695 per person, with a maximum of $2,085 per family. After 2016, the penalty amount per person or family will be adjusted for inflation.
Protecting your financial future
Keep in mind, even if you pay the penalty, you still don't have any health coverage. You're still responsible for 100 percent of the cost of your medical care. If you suffered a serious accident or developed a serious illness, your costs could be far greater than the cost of buying health coverage.
When you pay
You are required to pay the penalty when you file your federal income tax return. If you’re uninsured for just part of the year, 1/12 of the yearly penalty applies to each month you’re uninsured. If you’re uninsured for less than 3 months, you don’t have to pay a penalty.Visit
Subsidies and Tax Credits for more information.
There are some exemptions from the penalty. The major exception is having less than $10,000 in income as an individual, or $20,000 as a family. In that case, you’re likely to be eligible for Medicaid.
Jim is single and has no children or other dependents. In 2015, he does not have health insurance and does not qualify for an exemption. His household income is $40,000 and his filing threshold is $10,150.
Because $597 is greater than $325 Jim’s penalty for 2015 is $597.
Jim will make his penalty payment when he files his 2015 income tax return, which is due in April 2016.
Eduardo and Julia are married and have two children under 18. They do not have health insurance for any family member in 2015 and no one in the family qualifies for an exemption. For 2015, their household income is $70,000 and their filing threshold is $20,300.
Because $994 is greater than $975, Eduardo and Julia’s penalty payment for 2015 is $994.
Source: U.S. Internal Revenue Service
In addition to penalties, there’s an even more important reason to have health coverage: financial security. If you don’t have insurance, you have to pay for all your medical bills out of your own pocket. If you suffered a serious injury or developed a serious illness, you could be responsible for paying thousands, or even hundreds of thousands, of dollars—far more than the cost of buying health insurance. It could be an expensive gamble.
Having health coverage also ensures you can get the preventive care you need to make sure you stay healthy or find any health problems early, before they become more serious. Under the ACA, all health plans are required to cover basic preventive care services, including regular checkups and screenings, at little or no cost to you. Call us at 800-508-4722 with any questions.
Open enrollment for 2015 individual plans ended February 15. But you may be able to enroll or change plans now if you experience a qualifying life event.